In this series: How to file your taxes: step by step Check if you need to file Gather your documents Get credits and deductions File your return Get your refund Pay taxes on time Be ready to file taxes next year How they work You can claim credits and deductions when you file your tax return to lower your tax. Make sure you get all the credits and deductions you qualify for. If you have qualified dependents, you may be eligible for certain credits and deductions. Claim credits A credit is an amount you subtract from the tax you owe. This can lower your tax payment or increase your refund. Some credits are refundable — they can give you money back even if you don't owe any tax. To claim credits, answer questions in your tax filing software. If you file a paper return, you’ll need to complete a form and attach it. Here are credits you can claim: If you earn under a certain income level See if you qualify for the Earned Income Tax Credit. This is a refundable credit, so you can get back more than you pay in taxes. If you qualify, you can claim it even if you don’t normally file taxes or aren’t required to file. If you’re a parent or caretaker Find credits if you: Have children or other dependents Adopt a child Pay for childcare or dependent care If you pay for higher education See if you qualify for an education credit If you put money into retirement savings See if you qualify for the saver’s credit If you invest in clean vehicles or clean home energy Find credits if you: Buy a clean (electric or hybrid) vehicle Make home energy improvements If you buy health insurance in the marketplace See if you qualify for the Premium Tax Credit. Learn how to correct your rejected e-filed return for a missing Form 8962. If you qualify for other personal tax credits Find less common credits for people who: Paid taxes overseas Overpaid Social Security or RRTA tax Paid alternative minimum tax in prior years Paid tax on undistributed capital gains Take deductions A deduction is an amount you subtract from your income when you file so you don’t pay tax on it. By lowering your income, deductions lower your tax. You need documents to show expenses or losses you want to deduct. Your tax software will calculate deductions for you and enter them in the right forms. If you file a paper return, your deductions go on Form 1040 and may require extra forms. Standard vs. itemized deductions Most people take the standard deduction, which lets you subtract a set amount from your income based on your filing status. If your deductible expenses and losses are more than the standard deduction, you can save money by deducting them one-by-one from your income (itemizing). Tax software can walk you through your expenses and losses to show the option that gives you the lowest tax. Some people, including nonresidents and partial-year filers, can’t take the standard deduction. Standard deduction amounts The standard deduction for 2023 is: $13,850 for single or married filing separately $27,700 for married couples filing jointly or qualifying surviving spouse $20,800 for head of household Find the standard deduction if you’re: Over 65 or blind A dependent on someone else’s tax return If you’re married filing separately, you can’t take the standard deduction if your spouse itemizes. You must both choose the same method. Deductible expenses You can deduct these expenses whether you take the standard deduction or itemize: Alimony payments Business use of your car Business use of your home Money you put in an IRA Money you put in health savings accounts Penalties on early withdrawals from savings Student loan interest Teacher expenses For some military, government, self-employed and people with disabilities: work-related education expenses For military servicemembers: moving expenses If you itemize, you can deduct these expenses: Bad debts Canceled debt on home Capital losses Donations to charity Gains from sale of your home Gambling losses Home mortgage interest Income, sales, real estate and personal property taxes Losses from disasters and theft Medical and dental expenses over 7.5% of your adjusted gross income Miscellaneous itemized deductions Opportunity zone investment Get answers to questions on itemized deductions and the standard deduction Gather your documents File your return
